Working towards Six Sigma would definitely be of great benefit to Achiffa - Essay Example

The Chief Executive Officer – Achiffa Foods A. Consultant Systems and Operations Management 13 December Report Number of words: 2,985 Executive Summary Achiffa’s operations are riddled with problems that require the cooperation of all team members (employees) in order to make amends. They include both hard and soft problems. The soft problems are the ones which are unstructured and therefore require further analysis before they can be resolved. Checkland (1981) Soft Systems Methodology (SSM) in terms of the seven stage approach was utilised to obtain important information and later to facilitate improvements to the existing system of operations. Based on the root definitions a conceptual model was put forward indicating the areas that need immediate improvements. It was recommended that Deming’s Plan, Do, Check, Act modelled be considered. It was also recommended that quality management be a key aspect of improving the system and that the implementation of Six Sigma be considered in future. Introduction Achiffa operations is affected by a number of problems, most of which are related. Some of these problems cannot be solved using traditional or hard approaches to problem solving. It therefore means that another approach has to be found. These problems are more related to human activities and should be carefully dealt with. SSM is a framework that has developed to deal with problems of this nature (Checkland 1981; Checkland and Scholes 1990; Checkland 1999). The role of SSM is to investigate, gain understanding and identify problems. SSM is based on system thinking in that it views the problem domain in a holistic way with the recognition that all parts of the organisation are connected. This suggests that when changes are made to one part other parts of the system will be affected (Checkland 1999). Operations at Achiffa Snack Foods Achiffa Snack Foods purchases potatoes from various suppliers for it operations. These supplies are transformed during the production process into a total of six products including fries, potato wedges and hash browns. Achiffa customers are restaurants, supermarkets. However, waste products and rejects are sold to farmers. After production the goods are transported to regional distribution centres from which logistic providers - in this case FreshDist takes the products directly to the customers. The diagram below is an input-output model which provides a basic illustration of the operations at Achiffa. Input-output Model of Operations at Achiffa Snack Foods Adapted from: Kumar and Suresh (2009, p. 9) Customers are concerned about prices and so Achiffa has to ensure that the supply chain is managed in such a way that the company’s products are competitive. In order for this to be possible production has to be managed in an efficient and effective manner. Therefore the layout of the production area is very important as it helps to facilitate the smooth flow of operations. Additionally, Achiffa needs to ensure that production is planned in such a way that time is not taken up with setting up machines for processing several items in one day. The scheduling of production should also be linked to demand as well as the space available for storing the products – this is termed capacity management. It therefore means that the logistics provider would be required to work in accordance with the schedule provided for delivery. Correcting these problems would help reduce lean time by improving on time delivery, eliminate waste and reduce cost (McCreary 2009). It is important that management consistently examine as well as monitor the quality of service it provides to customers with a view to enhancing it. Achiffa should also ensure that the jobs of all persons involved in the production of its products encourage contribution to the success of the business. Arrangements should therefore be made to have enough supplies on hand so that products are replenished without undue delay. The Use of SSM to Resolve Problems at Achiffa SSM may be used to evaluate some of the problems at Achiffa Snack Foods. This is because most of the problems are related to culture, informal interactions and attitudes which Checkland calls human activity systems. Checkland (1981) suggests a seven stage approach to dealing with these problems. They are: 1) Centring the problem situation; 2) Expressing the problem situation 3) Formulating root definitions and relevant systems; 4) Building conceptual models of human activity systems; 5) Comparing the models with the real world; 6) Defining changes that are desirable and feasible; and 7) Taking action to improve the real world situation. Stage 1 – Centring on the problem situation at Achiffa Achiffa faces a number of unstructured problems that need to be solved in order for the company to gain competitive advantage. There are problems with the company’s logistic providers; delays in satisfying customers’ orders; various customer service issues; scheduling; processing; packaging; staff relations; and space problems. The management of Achiffa Snack Foods regional distribution centres is outsourced to FreshDist. However, there are problems in how they carry out their function as seen through the eyes of the internal actors and based on the number of complaints received from customers. FreshDist has been difficult to deal with because they turn up for products late. This is chaotic for Achiffa because of the limited storage facilities available. Achiffa has been forced to move products to different locations in order to accommodate products that FreshDist were due to pick up. Customers also complain about a number of additional problems which they have to deal with in transacting business with Achiffa. These problems range from: too few items sent; too many sent; late delivery; wrong items; missing or incorrect information; incorrect documentation; early delivery; and poor communication. The customer service representatives are not sure about how to prioritise these issues. However, information on their frequency per month and the time spent to resolve them has been provided. Complexities in the production of the Achiffa branded products which have added to the scheduling problems. This includes a total of seven products. Achiffa fries and wedges are manufactured on the existing lines and each requires 2 hours set up and change over time. Roasters, waffles and hash browns are manufactured on a separate line developed for these products. The cost of production of these products is higher and therefore they have lower profit margins. In spite of this the Achiffa brand is given priority over the other more profitable brands. This has resulted in frequent set ups and less production time. The drying process can end up removing too much water from the potatoes. Customers have complained about this. There are also complexities in the variety of weights that Achiffa ships to their range of customers. Fast-food customers order much larger bag sizes than supermarkets. Therefore, the production runs need to be scheduled correctly based on the potato variety, weight and end product. An effective chain of command does not exist in production due to the absence of the Operations Director. This has led to a number of problems including machines not being cleaned regularly. There is also a suspicion that russets are being processed as Idaho and vice-versa and this speaks to the lack of supervision in this department and complaint that the production line is being interrupted on a regular basis for no good reasons. This has resulted in the production team having to work hard to meet targets. Additional problems in the factory relates to eight different products being produced on one shift. Batches are not scheduled properly and so the ovens are on longer than required. Stage 2 – Expressing the problem situation at Achiffa Snack Foods According to Checkland (1999) the use of drawings to show the many elements in any human situation is something that has characterised SSM from the initial stages. The rationale for rich picture building lies in the fact that the complexity of human affairs is always based on a number of complex interacting relationships. Pictures are considered to be more useful in expressing relationships than linear prose. Checkland (1999) also indicates that pictures can be taken in as a whole as they help to encourage a holistic approach to a given situation. The problem situation at Achiffa can be expressed with the use of a rich picture diagram as shown below. Rich picture - the current situation at Achiffa Food Products Bryant (1989, qtd in Checkland 1999) indicates that a crucial skill in developing a picture is the selection of the key features involved. The picture above shows a selection of the key features in a situation at Achiffa. The situation illustrated in the rich picture indicates that sales and profits are declining and that there are several areas in which conflict exists. This includes conflicts between workers on the factory floor, between logistics provider FreshDist and Achiffa. Customers complain about several problems –both in relation to FreshDist in their role as logistics providers and also in relation to customer servicer. Some of the problems with incorrect orders may be due to inadequate monitoring in the factory. It is apparent that things only ran smoothly when Tim Granham – the operations director is present. However, ill-health is preventing this from happening. It is important that the culture of the situation in which work is done is understood (Checkland 1999). The expressions of many of the managers and directors at Achiffa relates to feelings and not facts. Decisions also appear to be based on that as the profit motive does not appear to be the key factor in making decisions – thus the emphasis on own brand products. Stage 3 – Formulating root definitions and relevant systems Having depicted the situation using rich pictures it is important to formulate root definitions using CATWOE. CATWOE is the mnemonic for the several criteria that should be specified in order to ensure that a given root definition is not only rigorous but comprehensive. Root definitions are normally derived for each actor in the rich picture. However, the root definition will be given in the context of a consultant who has been requested by Achiffa to evaluate their current situation and make recommendations for improvement. The criteria are as follows. Clients – These are defined as the beneficiaries or victims of this particular system. Achiffa Snack Foods has both beneficiaries and victims. Those who benefit include third parties like FreshDist and customers. Other beneficiaries include suppliers who supply potatoes and other goods and services to Achiffa. Actors – These are the persons who have the responsibility for implementing the system and making changes to it and those who carry out activities to make the system work. The CEO – Gary Achiffa Jr and support staff are responsible for implementation. The actors are the employees in the factory and the directors who are charged with managing various areas of the business. Transformation – The system at Achiffa transforms potatoes from Idaho and other areas in the USA into products such as fries, wedges and hash browns which supermarket and fast food chains require to serve their customers. Waste and rejects from the process also fulfil the needs of farmers and starch processors. Weltanschauung or world-view – The worldview that justifies the system and therefore makes it meaningful is the service provided to customers and the valuable contribution Achiffa’s business makes to production and the economy. Owner – The owner of the system at Achiffa is the CEO Gary Achiffa. He has taken over the ultimate management of the company from his father. However, he has delegated authority to the directors of the various departments. Human resources has responsibility for recruiting persons with the right attitude for the positions, and the operations department has responsibility for the production process and therefore what takes place on the factory floor. The task is to ensure that the layout of the area is such that the flow of goods is consistent with the demand for the products which Achiffa supplies. Environmental constraints – The external constraints which are taken as given exists in the competitive and macroeconomic environments. There is rivalry among competitors in the industry who supply substitute products. The bargaining power of Achiffa’s suppliers will determine the prices that the company can command and therefore the final price to the consumers of its products. Their power will be dependent on the volume of sales which they generate from Achiffa. The bargaining power of customers is dependent on their size and the volume of purchases. One of Achiffa supplier has used their power to negotiate better prices from Achiffa. Achiffa’s customers have various issues with the services received and so the way in which the matter is addressed will determine the company’s success. The factors in the macro-environment that will impact Achiffa’s business in some way are political, economic, social, technological, legal, and ecological. A strengths, weaknesses, opportunities and threats (SWOT) analysis of Achiffa would also shed some light on whether the company has adequate resources to deal with macro-environmental constraints effectively. Stage 4 – Building conceptual models of Human Activity Systems (HAS) Conceptual models show what is envisioned for Achiffa and the logical connections with each root definitions identified. Conceptual model - Achiffa’s future operations Stage 5 – Comparing the model to the real world It must be emphasised that the customers view is very important to the success of Achiffa’s business and so the company needs to correct the situation in the factory. Management needs to look at improving staff relations or by recruiting competent persons who understand that personal differences should not be allowed to impact their roles. The model shows little or no conflict which is possible if managed effectively. In the real world logistics providers are performing well and so it is possible to get it the situation fixed. Effective monitoring and control will result if an assistant is found for Granham. This will help to address some of the problems which have certainly impacted on customer satisfaction. The design and layout of the flow of operations in the factory can be improved by way of implementing a cellular layout. This will assist with scheduling which should be focused on reducing the number of set ups and therefore eliminating some of the waste in the system. Additionally, the supply chain department needs to consider finding a new logistics provider if no improvements are made after having a serious discussion with FreshDist. This should help in reducing customer complaints relating to delays in delivery and help to allay concerns relating to space in the warehouse. The scheduling of production and the use of a cellular layout may be considered appropriate in dealing with the situation. Improving customer service would also involve checking orders with goods supplied which is critical in facilitating a reduction in complaints regarding incorrect orders. Once customers are satisfied, demand will increase and this will impact sales and profits. This will put Achiffa in a better position to negotiate with suppliers in order to obtain better prices. Furthermore, decisions in relation to own brands should be related to profits instead of emotions. Stage 6 – Defining Changes that are desirable and feasible These recommendations may not work immediately as this is an iterative process. Customer complaints relate not only to quality of service but the quality of products supplied. Quality is defined as the added value which results from a productive endeavour (Pyzdek 2009). In order to improve quality at Achiffa Snack Foods every aspect of the manufacturing process needs to be assessed. Improving quality in any operation should be a team effort and therefore all employees at Achiffa would need to be apart of this process. Statistical process control may also be used to obtain information in order to determine the extent of process variation. This is critical and is a prerequisite to quality planning, control and improvement. Consideration should be given to the implementation of a six sigma programme at Achiffa in the long run. This would lead to a reduction in the number of defects and result in increased profits (Pyzdek 2009). Additionally, the company should pay attention to its inventory and ensure that its inventory levels are neither too low nor too high. This will be in accordance with the economic order quantity (EOQ) model which seeks to ensure that order and carrying cost are kept at their lowest level (Piasecki n.d.). This will also help in easing some of the capacity issues at Achiffa and assist the company in attaining lean manufacturing status. Stage 6 – Defining Changes that are desirable and feasible Most of he changes noted are feasible, except for that obtaining a new logistics provider and putting in place someone to monitor operations may be costly. This position requires someone who is able to lead – in the sense of getting people to do what needs to be done. It therefore means that other alternatives may have to be sought. Stage 7 – Taking Actions to improve the real world situation Achiffa’s management will need to take some decisive action in order to improve the situation that exists in the real world. This involves the use of Deming’s PDCA which is the mnemonic for: Plan what is needed; Do it; Check that it works; Act to correct any problems or improve performance (Arveson 1998; Business Balls n.d.). A survey could be done to obtain information on what customers require. Statistical process control could also be carried out to determine the level of deviations over several production processes. This will determine whether corrective action will be required. Conclusion Working towards Six Sigma would definitely be of great benefit to Achiffa as this would drive down cost. Additional customers would also be attracted to the business if products of high quality are produced and this would draw additional customers to the business. The implementation of Six Sigma would require persons with a higher level of knowledge as it requires Master Black Belts, Black Belts and Green Belts in the organisation. These represent varying levels of competence with Master Black Belt being the highest level and Green Belt the lowest. Six Sigma is similar to the older TQM model which is described as PSDA - Plan, Do Study, Act (Pyzdek 2009). References Arveson, P. (1998). The Deming Cycle. [Online] Available at: http://www.balancedscorecard.org/TheDemingCycle/tabid/112/Default.aspx [Accessed 5th December 2011] Business Balls. (n.d.). The Original Quality Gurus. [Online] Available at: http://www.businessballs.com/dtiresources/quality_management_gurus_theories.pdf [Accessed 5th December 2011] Checkland, P. (1981). Systems Thinking, Systems Practice. New York: John Wiley & Sons Checkland, P. and Scholes (1999). Soft Systems Methodology in Action. New York: John Wiley & Sons Ltd. Checkland, P. (1999). Systems Thinking, Systems Practice: Including a 30 – year perspective. UK: John Wiley & Sons Ltd Kumar, S.A. and Suresh, N. (2009). Operations Management. New Delhi: New Age International Publishers McCreary, P.J. (2009). The Need for Lean Flow. [Online] Available at: http://www.americanmachinist.com/304/Issue/Article/False/84882/Issue. [Accessed 25th November 2011] Piasecki, D. (n.d.). Optimizing Economic Order Quantity (EOQ). [Online] Available at: http://www.inventoryops.com/economic_order_quantity.htm. [Accessed 29th November 2011] Pyzdek, T. (2009). Why Six Sigma? [Online] Available at: http://www.sixsigmatraining.org/six-sigma-revolution.htm. [Accessed 5th December 2011] Read More